Sally opened a tropical fish store as a corporation and called it Exotic_Aquatics.com, selling only via the Internet. During 2011, the first year of business, Sally’s company had the following transactions:

a. The business was started with Sally’s contribution of $16,500 in exchange for common stock on January 1.

b. The company borrowed $10,000 from First American Bank at 7.5% for 12 months on January 1.

c. The company purchased $6,000 in inventory for cash on February 15.

d. The company paid $3,600 of rent to a Webmaster on June 30 for use of a maintained Web site for two years starting July 1.

e. The company had cash sales of $11,100 for 2011 with cost of goods sold of $2,500.

f. The company paid $1,050 in advertising fees.

Requirements

1. Post the preceding transactions to T-accounts to determine the balance of each account on December 31, 2011; include any adjusting entries necessary.

2. Prepare the adjusted trial balance at December 31, 2011, the income statement, statement of changes in shareholders’ equity, and a statement of cash flows for the year ended December 31, 2011, and the balance sheet at December 31, 2011.